9 June 1998

Martin Khor

GATT, the predecessor of the WTO. However, the free trade system which the WTO represents came under attack from thousands of demonstrators who turned this into a city under seige. The free- trade philosophy is also being called into question by development, social and environmental groups; and was also overshadowed by the Asian crisis and the dramatic events in Jakarta. MARTIN KHOR reports from Geneva. 

It was planned as a grand birthday celebration to mark the 50^th year of the free trade system.

But the second Ministerial Conference of the World Trade Organisation held in Geneva last week will instead be remembered as a turning point in the rush towards globalisation. 

As world leaders and trade ministers gathered here, half a century after the birth of GATT (the General Agreement on Tariffs and Trade), the predecessor of the WTO, the public backlash against rapid liberalisation was all too clear. 

On the eve of the Conference, ten thousand people from many parts of the world staged a peaceful demonstration that paralysed Geneva's streets. They were protesting against the social dislocation caused by free trade and the holding of the WTO meeting. 

Gathered under the umbrella of "People's Global Action", the groups represented farmers from both the South and the North who believe the removal of trade barriers will cause multinational companies to take over their markets and lands.

They also represented workers angered that the race for "efficiency" and cost-cutting is leading to massive job losses, and consumers concerned that the profit motive has led corporations to push sales of harmful products such as tobacco and genetically- engineered foods. 

In the evening a small part of the crowd, reportedly made up of frustrated town youth, smashed and overturned cars and broke shop windows. 

In the next few days, as small demonstrations continued, Geneva was like a city under seige. Barricades manned by helmeted police blocked the roads leading to the United Nations and WTO buildings, causing traffic jams. 

Participants of the WTO Conference had to walk for miles because of the diversions. Those in cars faced delays. 

Police warned the delegates not to display their Conference badges in public and to remove the official sticker on their cars, so as to avoid being identified and attacked in the city. 

On the second night when President Clinton paid a one-hour visit to the Conference, security in the city and in the UN building was so tight that participants and city dwellers alike made snide remarks about the inconvenience caused by the Emperor of the World.  

Despite the brevity of his visit, the US President was given pride of place, as an entire night session was devoted to his speech commemorating the 50th anniversary of GATT. 

He gave a rousing cheer for free trade, and marked out the American vision of an "ever-more-open" global trading system. Seeking to please the disenchanted non-governmental organisations of the North, Clinton vowed to harmonise trade with environmental and labour causes, and to open up the WTO to the NGOs. 

He also pressed for even more rapid liberalisation in services, agriculture and government procurement, and proposed that customs duties not be imposed on services transmitted electronically. 

Delegates from most developing countries were less than enthusiastic with Clinton's performance. His speech did not show sympathy for the problems faced by the the poorer countries in having to implement the existing WTO agreements. 

The opening up of their countries in agriculture, services, and industry, as well as their having to undertake new obligations in intellectual property rights, has greatly increased the danger that many local firms and farms may face closure as they are unable to compete with the giant foreign firms. 

The Ministers from many developing countries listed down the problems faced because of this rapid liberalisation and requested that no new issues be added onto the already heavy WTO agenda as they simply cannot cope with more negotiations. But the US (as well as the European Union and Japan) were pressing for further liberalisation as well as a new round of negotiations to expand the powers of the WTO over more areas. 

They proposed upgrading the issue of trade and environment (with plans for a Ministerial meeting involving both trade and environment Ministers early next year), and tried to bring back the issue of labour standards (which developing countries had hoped they had thrown out at the Singapore Conference in 1996). 

They are also intent on converting the working groups on investment, competition policy and government procurement (presently mandated only to discuss issues) into full-scale negotiating groups for new agreements. 

Even as the developing countries pleaded for more understanding and a slowing down of the pace of liberalisation, the rich nations were aggressive in pushing the WTO headlong into new areas.

It was thus not surprising that the loudest cheers at the Conference were reserved for none other than Cuba's President Fidel Castro, who attacked the US for its unilateral trade actions, the

North for trying to smuggle in a multilateral agreement on investment, and the "unfair and unbalanced" trade system. 

The Third World countries, said Castro, have been losing everything: custom tariffs that protected their emerging industries and produced revenues; agreements on commodities; producers' associations; price indexation; preferential treatment; and any instrument protecting their export value and contributing to their development. 

"Why isn't the unfair and unbalanced trade mentioned?" he asked.

"Why is the unberable weight of external debt no longer discussed?

Why is official development aid being reduced? 

"How are we supposed to make a living? What goods and services shall we export? Which industrial production will be left to us?" 

He called on developing countries, who form the majority in the WTO, to unite so that they can use their vote to turn the WTO into an instrument for a better world. 

And he ended by reminding that even the United States, having inflated share prices, may not be able to prevent a financial meltdown. He proposed that among the new issues, the WTO should assess the risks of a breakdown and answer the question: "Global Economic Crisis: What to do?"

The long and warm applause following Castro's speech showed it had struck a chord with the delegates of many developing countries who have increasingly felt that the free-trade race of the WTO system is leaving them behind. 

The negative effects of "marginalisation" have been voiced more and more, especially by African countries and other least developed nations. 

This is a code term for how cheap imports have flooded their markets (after having to reduce their import duties) and displaced their local firms, whilst at the same time they lack the capacity to expand their exports.

"There is no reason for us to celebrate 50 years of the trade system as it has not brought us benefits," said the Ambassador of one African country. But the birthday party was marred not only by the continuing impoverishment of the poorest countries. 

It was overshadowed even more by the shock of the financial crisis of the East Asian countries that hitherto had been the shining examples of how much wealth can be brought by liberalisation. 

There is an emerging consensus that over-rapid financial liberalisation had paved the road to the Asian currency collapse and debt crisis, and that the International Monetary Fund's policy prescription of opening up further made the situation worse.  

The large student and public protests in Jakarta, leading to the toppling of President Suharto, had a profound effect in dampening the atmosphere of the WTO Conference in Geneva. 

It was clear that the East Asian countries were not in the mood to receive pressures by the rich countries for new areas of their economies to be opened up, when they are preoccupied with survival and recovery. 

The rapidity with which economic crisis can lead to political crisis and change was shockingly exposed by the hour-by-hour developments in Jakarta, brought up-to-date to the participants in Geneva via CNN and BBC. 

At the parallel NGO conference, many workshops were being held on the downside of globalisation, from the destruction of the environment and the climb in unemployment in the North, to the threat faced by farmers and the marginalisation of poor countries. 

The claims by the WTO champions about the wonders of trade and investment liberalisation have come against a strong wall of skepticism being expressed by ordinary citizens of both developed and developing countries. 

The irony was not lost on any thoughtful participant of the WTO Conference. As the delegates and NGOs were being encouraged to toast to the 50 years of the free trade system, the buildings they were in had to be surrounded by security personnel to protect them from the people outside protesting against the effects of globalisation. 

The ironies and contradictions in this commermorative Conference -- best brought up in the contrast between Clinton's gung-ho proposals for more of the same business, and Castro's call to overhaul the trade system in view of the global crisis -- should get the WTO member countries to take a pause from their busy schedule to reconsider just where the system is leading us. 

But there is little chance that pause will take place. At the end of the Conference, the Trade Ministers adopted a Declaration that committed their diplomats to pursue the possibility of more liberalisation in a wide range of new issues in the next 18 months before the next Ministerial Conference, to be held in the United States.